A and B share profits in the ratio of 3:2. C is admitted for a 1/5 share, which he takes equally from A and B. What is the new profit-sharing ratio of A, B and C?
Correct answer: A. 2:1:2
- A. 2:1:2
- B. 3:2:1
- C. 5:3:2
- D. 4:3:2
Explanation
C takes 1/10 from each existing partner. A's new share is 3/10 minus 1/10, or 2/10, while B's is 2/10 minus 1/10, or 1/10. C receives 2/10, giving the ratio 2:1:2.
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About Partnership Accounts
Partnership accounts cover the partnership agreement, capital and current accounts, profit and loss appropriation, salaries, interest on capital, interest on drawings and profit-sharing ratios. They also address changes in partnership, including admission, retirement, goodwill, revaluation, dissolution and the settlement of partners’ balances.
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